Mobile Advertising

As mobile ad spending is projected to exceed $100 billion, marketers are keen on boosting the effectiveness of their mobile ad strategies. One strategy is to target consumers based on the crowdedness of their environment. We rely on field data from a large telecom provider who can gauge physical crowdedness in real-time in terms of the number of mobile users in subway trains. The telecom provider randomly sent targeted mobile ads to individual users and measured purchase rates. Based on over 14,000 mobile users, the results suggest that commuters in crowded subway trains are twice as likely to respond to a mobile offer by making a purchase vis-à-vis those in noncrowded trains. These results are robust to exploiting sudden variations in crowdedness and controlling for peak and off-peak times, weekdays and weekends, mobile use behaviors, and randomly sending mobile ads to users. Follow-up surveys suggest a plausible explanation is mobile immersion: As crowding invades one’s physical space, people adaptively turn inwards and become more susceptible to mobile ads.

Another strategy is to target consumers based on their historical location. Using randomized field experiments, we compare sales of customer-centric ads to those of product-centric ads and leverage geo-tracking to identify locational contexts. We find that mobile ads that cater to locational contexts are more effective in boosting sales. Digital marketers can thus boost the effectiveness of hyper-contextual mobile advertising by considering the crowdedness of a consumer’s environment or by tailoring ad content to consumer locational contexts.